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Blake Kosak

The global smart home market is forecast to exceed $14 billion in 2017, with 10 percent of homes globally being smart by 2025, according to an IHS Markit report published this week.

“The smart home market has seen significant growth since 2010, when fewer than 0.5 percent of homes in the Americas region had connected devices such as thermostats, lighting, security and entertainment,” Blake Kozak, principal analyst, IHS Technology, said in a summary of the report. “By the end of 2017, nearly 7 percent of households in the region will have a connected home, averaging six devices per home.”

According to IHS, The global market for smart homes is currently worth $14.7 billion, with the Americas region representing 48 percent of global revenues, and by 2021, the EMEA region will represent the largest portion of device revenue with a 42 percent global share.

“When excluding large ticket items, such as major appliances, the global market size for smart home devices is forecast to be worth $3.3 billion by the end of 2017, reaching $9.4 billion in 2021,” Kozak noted. “Although the EMEA and Americas regions are expected to represent more than 70 percent of revenues for smart devices over the next five years, Asia is expected to dominate in terms of unit shipments. In 2021, the Asia region is expected to represent about 46 percent of unit shipments. Leading the unit shipments in Asia in 2021 will include light bulbs, air quality sensors and video cameras.”

The report also found that the top five players account for 36 percent of revenue in the space, including Nest, Amazon, Honeywell, Xiaomi and Netgear, who rounded out the top five for smart home revenue accounting for 36 percent in 2016 when excluding appliances. The top five players for unit shipments in 2016 accounted for 34 percent of global unit shipments and included Xiaomi, Amazon, Honeywell, Nest and Koninklijke Philips N.V.

“Globally, 19 manufacturers had more than 500,000 annual smart home device shipments in 2016,” said Kosak, while “46 manufacturers had more than $10 million in revenue in 2016, when excluding appliances.”

The top smart home devices to watch in terms of unit shipment growth include radiator valves, air quality sensors, smart speakers and appliances.

“Home audio (smart speakers) will continue to be one of the most disruptive trends in smart home through 2021,” Kosak pointed out. “The primary reason voice assistants in the smart home will gain significant traction across all three regions is the ability for these devices to aggregate disparate systems. So instead of using five different mobile applications in order to control the smart home features, voice can be used to aggregate all control, reducing the need to interact with a mobile device once the product is setup.”

Although appliances were the fourth largest device type in terms of unit shipments in 2016, they will be the most shipped device type in 2021, according to IHS, which noted that many appliances are already embedded with Wi-Fi capabilities that only need to be turned on by the manufacturer.